Definitions Flashcards
(59 cards)
Gross National Product
- Value of all the goods and services produced in an economy, plus the value of the goods and services imported, less the goods and services exported
- measures the income of an economy, the quantity of goods and services the economy can afford to purchase
Micro economics
Detailed treatment of individual decisions about particular commodities
Macroeconomics
Is the study of the economy as a system
Interactions in the economy as a whole
Aggregate supply
Is aggregate supply itself and aggregate supply function
Aggregate supply itself - productive capacity available in the economy to produce goods and services
Aggregate supply function - schedule detailing the national products that would be supplied at each general price level
Aggregate demand
Aggregate demand itself and aggregate demand function
Aggregate demand itself - total sum of nominal expenditures on goods and services in the economy
Aggregate demand function - schedule detailing the quantity of national product that would be purchased at each general price level
Inflation rate
Is the percentage increase in the average price of goods and services
Economic growth
The growth rate of real GDP ( or real output) over a determine period of time (e.g. Annual, quarterly etc)
Circular flow
Shows how real resources and financial payments flow between firms and households
Fiscal policy
Government policy on spending and taxes with the purpose of stabilising the economy ( keep output close to potential output)
Made by treasury in gov
Fiscal stance
Shows the effect of fiscal policy on demand and output
Expansionary fiscal policy aims to…
Raise national income
Contractive fiscal policy aims to…
Reduce national income
Monetary policy
Concerns money supply. Controlled by the central bank.
Affects C and I by altering interest rates.
Money supply
Currency in circulation outside the baking system plus deposits of commercial banks and building societies
(Value of the stock of the medium of exchange in circulation)
Open market operation
Occurs when central bank alters the monetary base by buying or selling financial securities in the open market
Real GDP
At constant prices
Nominal GNP
At current prices
Gross Domestic Product
- monetary value of economic activity in a period of time
- market value of all the final goods and services produced within a country in a given period of time
- total value of an economies domestic output of goods and services
Money
Any generally accepted means of payment for delivery of goods or settlement of debt
Money as a store
Money is a store of value because it can be used to make future purchases
Bank reserves
Money available in the bank to meet possible withdrawals by depositors
Reserve ratio
Ratio of reserves to deposits
Commercial banks
Financial intermediaries licensed to make loans and issue deposits, including deposits against which cheques can be written
Monetary Base
Quantity of notes and coin in private circulation plus the quantity held by the banking system